Select Committee on European Scrutiny Third Report


COM(01) 437

Commission Communication on the impact of enlargement on regions bordering candidate countries — community action for border regions.

Legal base:
Document originated: 25 July 2001
Deposited in Parliament: 2 October 2001
Department: Foreign and Commonwealth Office
Basis of consideration: EM of 11 October 2001
Previous Committee Report: None
To be discussed in Council: No date set
Committee's assessment: Politically important
Committee's decision: Cleared, but relevant to any debate on enlargement


16.1  In its November 2000 Enlargement Strategy Paper,[24] the Commission recognised that the people in the regions bordering the candidate countries needed to be reassured of the positive effects of enlargement. It planned to make an analysis of the socio-economic situation in border regions and of the structural measures available to them. The Nice European Council in December called on the Commission to "propose a programme for the frontier regions in order to strengthen their economic competitiveness".

Commission Communication

16.2  The Communication sets out the Commission's analysis and proposes a programme for Community Action for the Border Regions.

16.3  The Commission analysis examines:

    —  the socio-economic situation of border regions and the likely effects of enlargement;

    —  existing Community support for border regions; and

    —  measures which could be taken to strengthen the competitiveness of border regions.

16.4  It identifies 23 border regions which would be affected by enlargement. These are in Finland, Germany, Austria, Italy and Greece and they form three groups:

    —  the Greek mainland border regions, which face the most difficult economic situation, and the Greek Aegean border regions;

    —  the new German Länder and the Burgenland region of Austria. These lag behind in terms of economic performance; and

    —  all other border regions. These are fairly well developed in comparison with the EU, as well as with the national average of their Member State.

16.5  The analysis indicates that cross-border economic relations between neighbouring regions are likely to intensify after enlargement. According to the statistical evidence, far from having a negative impact, the gradual opening of Community borders to candidate countries during the 1990s had a positive impact on border regions. For instance, per capita income levels in Austrian border regions have risen significantly, while those in Bavaria have remained stable.

16.6  The experience of the accession of Spain and Portugal and recent Commission estimates[25] prompt the Commission to suggest that, contrary to fears that the income gap would lead to large migration flows into the EU, long-term migration from candidate countries to the current EU Member States will be limited to around 1% of the present EU population. The phased introduction of labour mobility will further reduce migration pressures. However, migration and cross-border commuting will vary considerably between border regions, and will probably continue to affect Germany and Austria more than other EU Member States.

16.7  Border regions may expect to benefit from enlargement in the medium and long term but in the short term they may need to adjust more than other regions to rapidly changing market conditions. Capital-intensive and technologically advanced sectors in these regions are likely to benefit from enlargement, while labour-intensive sectors are likely to face increased competition from cheap labour.

16.8  The Commission recognises that the EU border regions already benefit from a number of Community-wide policies and from Community financial assistance, including the Structural and Cohesion Funds. Furthermore, many border regions are eligible for national regional aid under state aids rules, though it notes that not all Member States fully exploit the regional aid ceiling of 20% net which the Commission can approve. However, it considers that more could be done to complement these forms of assistance. For instance, among the major problems identified are the lack of adequate transport, causing transport bottlenecks, and of projects to improve the environment. The European Investment Bank (EIB) is very active in Member States but not so active in the candidate countries. Their ability to produce matching funds is limited, but this could be remedied through a combination of grants and EIB lending.

16.9  The Communication concludes by recommending that it would be appropriate to take further action in the border regions to ensure a smooth transition towards economic integration. Since these regions vary widely, it proposes that, rather than creating one single new instrument, a combination of new and improved measures would be more effective. To maximise the impact of the proposed measures, the Commission recommends that they be coordinated within a single programme entitled Community Action for Border Regions.

16.10  The main recommendations are:

    —  higher investment in transport infrastructure in the framework of the trans-European network (TEN) through an increase in the maximum level of Community support for TEN-projects to 20% of total project cost, subject to a change in TEN financial regulations. Special financial assistance should be arranged for TEN projects in border regions, amounting to 150 million euros in the period 2003-2004;

    —  a proposal for a re-orientation of structural instruments to maximise the impact of Community financial assistance;

    —  co-operation activities for small and medium-sized enterprises funded through a specific 15 million euros pilot project initiated by the European Parliament for the period 2001-2002;

    —  Community support of up to 20 million euros for networking measures between border regions and candidate countries in the framework of INTERREG[26];

    —  better co-ordination of the INTERREG III A and Phare Cross-Border Co-operation programmes, in line with the Commission's proposals announced in its Phare Review Communication of October 2000;

    —  a proposal to modify the Phare-CBC Regulation by the end of 2002 with a view to:

      —   fully aligning the priority topics under Phare CBC and INTERREG A; and

      —   facilitating co-financing for transnational (INTERREG B) or interregional (INTERREG C) co-operation projects in well-founded cases;

    —  a special programme of the European Investment Bank to support environmental and transport infrastructure projects in neighbouring regions of candidate countries;

    —  an additional 10 million euros of Community support to be dedicated to targeted "people to people" youth exchanges, voluntary service and training and information activities in border regions, within the framework of the YOUTH programme;

    —  making full use of the flexibility provided by existing state aid rules on the geographic eligibility and intensity of state aid for regional purposes, and for risk capital for the creation and initial development of businesses;

    —  refocusing existing rural development programmes to improve the competitiveness and diversification of activities in border areas;

    —  highlighting the issue of border regions in the Strategy on Enlargement and encouraging Member States to ensure that information campaigns address the many unfounded concerns over the negative effects of enlargement, such as those of uncontrolled immigration, cross-border commuting and increased competition; and

    —  creating a working group of the relevant services within the Commission to aid co-operation and act as a contact point in following up the actions proposed.

The Government's view

16.11  In his Explanatory Memorandum of 11 October, the Minister for Europe at the Foreign and Commonwealth Office (Mr Peter Hain) says:

    "The Government agrees with the assessment that the border regions of the current EU stand to be significant beneficiaries of enlargement in the medium and long term. These benefits are not limited to the economic field. They include reductions in cross-border pollution and in trafficking of drugs and people as the candidate countries raise their border control, environmental and other standards to match those of existing EU Member States. The Government also recognises that existing evidence suggests there is unlikely to be a major influx of migrants from the candidate countries into the current EU.

    "However, the Communication rightly identifies that some of the border regions may face short-term economic challenges as a result of enlargement. The disparity between economic standards in EU border regions and candidate country border regions is greater than in previous enlargements. This may lead to greater migration pressures or increased competition in certain sectors. And there are public fears in the EU border regions about the impact this will have on local populations. Recognition of these fears led to the EU's decision to adopt a transition period of up to 7 years during which existing EU Member States would not be obliged to open their labour markets to workers from the new Member States. This was balanced by the option of lifting the transition period after just 2 years.

    "The Government wants to see an early and successful enlargement of the European Union. It considers that the proposals put forward by the Commission under the Community Action for Border Regions are acceptable and appropriately focussed on helping ensure a successful transition to an enlarged EU, so long as they come from within existing programmes and funds."

Financial implications

16.12  The Minister notes that the Commission proposes to dedicate 195 million euros to border regions of the Member States in the period 2001-2006, in addition to the resources already available under the Structural Funds. The majority of this sum,150 million euros, would be in the form of investment in the transport infrastructure. The funds are to come in part from reallocation of funds and in part from unspent funds, all within the existing budget for 2000-2006. There is no new money involved and therefore, he says, no financial implication for the UK.


16.13  The Communication was presented to the Central European Working Group on 8 October. The Minister says that the Commission is now working up full proposals for each of the recommended activities. These will be referred to the budgetary authority for approval and will be subject to review by the relevant committee for each funding instrument. The Presidency has asked the Commission to report back in December with an update on implementation.


16.14  We note that the Government agrees with the Commission's assessment that the border regions of the European Union stand to be significant beneficiaries of enlargement in the medium and long term. While, like the Commission, the Minister emphasises the positive aspects of enlargement, he does also recognise that in these regions the local people fear the impact of the short-term economic challenges which enlargement will bring.

16.15  The Commission says that, according to its recent estimates, and with the experience of the accession of Spain and Portugal in mind, it does not expect large migration flows, though migration and cross-border commuting will probably affect Germany and Austria more than other Member States. The Minister says that the Government also thinks it unlikely that there will be a major influx.

16.16  We consider that, although none of the border regions is in the UK, the issues raised in this Communication are of political importance. Fears over the impact of enlargement have a strong influence on public attitudes to the European Union, particularly in border regions, and there is a need for the governments of the Member States to calm such fears, if they are in a position to do so on the basis of sound assessments, and to demonstrate that they are prepared to take measures to alleviate short-term negative impacts.

16.17  We now clear this document, but it would be relevant to any debate on the enlargement of the European Union.

24  (21833)13358/00; see HC 28-iv (2000-01), paragraph 6 (24 January 2001) and HC 28-vi (2000-01), paragraph 11 (14 February 2001). Back

25  No source is given for these estimates. Back

26   A Community programme to develop inter-regional cooperation within the EU, financed from structural funds. Back

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